The rights and obligations of Czech employers and employees in the Czech Republic are defined mainly by Act No. 262/2006 Coll., the Labour Code. Based on this act every employee is entitled to receive a written employment contract, which could be written in any language provided that both parties to the contract fully understand the language. The employment contract must include only three obligatory definitions: the type of work, the place of work, and the date on which the work commences.
A feature of the Czech legislation, which is not common in countries of the European Union and outside the EU, is that the employee's salary does not need to be specified in the employment contract (although it mostly does contain this specification). The salary can be agreed upon in a separate contract, but it can also be set unilaterally in a salary assessment. The salary assessment entitles the employer to lower the employee's salary provided that the minimum wage is respected (currently CZK 9,200 per month, CZK 55 per hour)
Wage Compensation in Case of Temporary Work Incapacity
When an employee falls ill and his/her temporary work incapacity is recognised in consequence, the law provides for the entitlement to wage compensation in the first 14 calendar days, paid by the employer. But wage compensation in these 14 days is due only for working days with the exception of the first three working days (or the first 24 hours of scheduled shifts) when the employee has no entitlement to wage compensation. From the fourth day, wage compensation amounts to 60% of the average earnings of the employee reduced in keeping with the law, with a maximum daily limit of CZK 1,217 (for eight hours) for 2015.
After the 14 days of temporary work incapacity, the employee receives sickness benefits from his/her sickness insurance for every calendar day, paid by the State.
Working time and overtime
As in most European countries, the weekly working hours must not exceed 40 (with some exceptions). The employer can order an employee to work overtime, but no more than eight hours a week and 150 hours in a calendar year. Any additional overtime work must be agreed upon with the employee. The total overtime work must not exceed an average of eight hours per week, which means approximately 416 hours per year. For each hour of overtime work, the employee is entitled to his/her regular wage plus 25% of average wage. It can be agreed that 150 hours of overtime work in a calendar year are included in the contracted salary. For managerial employees, all allowed overtime work, that is to say, up to 416 hours of overtime per year, may be included in the agreed wage.
Termination of Employment Relationship
The Czech provisions for the termination of employment relationship differ noticeably from provisions in many countries. Most importantly, employers can terminate the employment relationship only for reasons defined in the Labour Code, which are: organisational changes, health reasons, failure to meet prerequisites prescribed for the agreed work, and breach of duties by the employee. The employer may not terminate an employment relationship arbitrarily (that is to say, without stating one of the reasons defined by the Labour Code).
If the employment relationship is terminated for organisational reasons, the employee is entitled to statutory severance pay based on the length of their employment: one average monthly wage if the employment lasted less than a year, two average monthly wages if the employment lasted more than a year and less than two years, and three average monthly wages if the employment lasted more than two years. If the employment relationship is terminated for reasons of health or due to an industrial injury, an occupational disease or due to threat of such disease, the employee is entitled to severance pay of at least twelve times the amount of average monthly earnings. A collective agreement, internal regulation, or mutual agreement (contract of employment or agreement on the termination of an employment relationship) can increase the severance pay, or lay down other conditions of the employee's entitlement to higher severance pay.